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Telefonica looks for commercial opportunity by using the insights of Big Data

Telefonica, the Spanish mobile phone operator and owner of O2, is launching a new in-house operation to sell information about its customers. The new division, called Telefonica Digital Insights will offer companies and public sector bodies “analytical insights” based on users’ anonymised location data. Telefonica has been struggling in recent times to cope with the economic realities of a global recession and the downgrading of its creditworthiness by Standard and Poors earlier this year. Yet the company is optimistic that by exploiting the power of such ‘Big Data’ it can help to revive its flagging fortunes after falling sales. However there is some concern within the industry that the ‘insights’ that the company wants to commercialise will not prove to be as useful as claimed.

The division’s first product, Smart Steps, will provide retailers and other bodies with location “heat maps” of mobile phone users’ movements throughout the day. A spokesperson for the company told the BBC:

“Using our aggregated and anonymised mobile phone mast data we can provide retailers with a digital headcount to help them understand the movement of crowds. Retailers are quite good at measuring footfall inside their stores, but this data will tell them where people go once they are outside, as well as their age and gender.”

There’s nothing new, per se, in the purchase of footfall data: many retailers already buy such information from specialised data companies like Springboard and Experian, so it remains unclear how Telefonica believes it can add value to these existing services. Such doubts about the value of Big Data insights were expressed by Richard Dodd, a spokesman for the British Retail Consortium, who told the BBC that it was arguable that it would only prove to be of any real value to certain sectors of the market:

“A teenage fashion chain might find it useful to know when and where teenage girls tend to congregate around town. So this kind of granular data could prove a useful addition to the existing footfall data, providing it is accurate.”

There is also the added problem that location data based on triangulation of mobile phone mast signals is not particularly accurate at the moment and can only give an approximate location within a grid of a few hundred metres. As it stands a retailer will not be able to tell if people are congregating outside their own shop or that of a rival’s next door. Telefonica, however, believes that it can add sophistication to the process and make it much more accurate over time. It argues that mapping mobile phone users’ general movements could help retailers make strategic decisions on store location and opening times, and help town councils plan car parking facilities and manage public events. Chief commercial officer at Telefonica Digital, Stephen Shurrock explained:

“Big data is one of the key building blocks of the digital economy. Approached in a smart and responsible way it has the potential to transform every part of business and society – providing economic growth and improving people’s lives.”

Telefonica Digital Insights has teamed up with market research company GFK to help it develop products in the UK, Brazil and Germany to begin with. However, what has concerned many within and outside the industry is that Telefonica, which has about 23 million UK customers and 311 million worldwide, will not allow people to opt out of the service should they want to. The company has defended this decision, arguing that as there is no disclosure of personal information at all it feels it is unnecessary. The company’s statement claimed:

“This is not about analysing surfing behaviour; the anonymisation and aggregation process protects privacy.”

Although there remains some unease about using Big Data in this way, the company has received the backing of the Information Commissioner’s Office – the body which polices the Data Protection Act: a spokesman told the BBC’s technology correspondent:

“So long as an individual’s personal information cannot be identified from this service, we don’t have any problem with it.”